Microsoft is working on automated checkout technology that could help retailers compete with Amazon’s new cashier-less stores.
One firm building automated checkout systems, Ava Retail, said Thursday it is working with Microsoft on the technology for physical stores. Both companies have headquarters in Redmond, Washington.
Ava Retail CEO Atul Hirpara said Microsoft could become a leader in the field because it has a strong cloud computing platform. That technology would power the retail system by pulling in data from in-store cameras or sensors.
Amazon opened its first cashier-less Amazon Go store in Seattle this year and plans more locations in Chicago and San Francisco. Overhead cameras and other technology help keep track of customers and what they're buying.
Microsoft’s interest in working with retailers on similar technology was reported earlier by Reuters. It remains unclear how far along Microsoft is in the project. The report of its involvement didn’t surprise others in the fast-growing automated checkout industry.
Michael Suswal, co-founder of San Francisco-based startup Standard Cognition, said Microsoft has the teams capable of developing the software and the infrastructure needed to deploy it broadly.
Suswal said his firm is also working with retailers — but not currently with Microsoft — on its own automated checkout system using overhead cameras.
“Within five years, everyone in the country will have visited an autonomous checkout store,” Suswal said.
Microsoft is working on automated checkout technology that could help retailers compete with Amazon’s new cashier-less stores.
One firm building automated checkout systems, Ava Retail, said Thursday it is working with Microsoft on the technology for physical stores. Both companies have headquarters in Redmond, Washington.
Ava Retail CEO Atul Hirpara said Microsoft could become a leader in the field because it has a strong cloud computing platform. That technology would power the retail system by pulling in data from in-store cameras or sensors.
Amazon opened its first cashier-less Amazon Go store in Seattle this year and plans more locations in Chicago and San Francisco. Overhead cameras and other technology help keep track of customers and what they’re buying.
Microsoft’s interest in working with retailers on similar technology was reported earlier by Reuters. It remains unclear how far along Microsoft is in the project. The report of its involvement didn’t surprise others in the fast-growing automated checkout industry.
Michael Suswal, co-founder of San Francisco-based startup Standard Cognition, said Microsoft has the teams capable of developing the software and the infrastructure needed to deploy it broadly.
Suswal said his firm is also working with retailers — but not currently with Microsoft — on its own automated checkout system using overhead cameras.
“Within five years, everyone in the country will have visited an autonomous checkout store,” Suswal said.
SAN FRANCISCO (Reuters) - Microsoft Corp (MSFT.O) is working on technology that would eliminate cashiers and checkout lines from stores, in a nascent challenge to Amazon.com Inc’s (AMZN.O) automated grocery shop, six people familiar with the matter told Reuters.
The Redmond, Wash.-based software giant is developing systems that track what shoppers add to their carts, the people say. Microsoft has shown sample technology to retailers from around the world and has had talks with Walmart Inc (WMT.N) about a potential collaboration, three of the people said.
Microsoft’s technology aims to help retailers keep pace with Amazon Go, a highly automated store that opened to the public in Seattle in January. Amazon customers scan their smartphones at a turnstile to enter. Cameras and sensors identify what they remove from the shelves. When customers are finished shopping, they simply leave the store and Amazon bills their credit cards on file.
Amazon Go, which will soon open in Chicago and San Francisco, has sent rivals scrambling to prepare for yet another disruption by the world’s biggest online retailer. Some have tested programs where customers scan and bag each item as they shop, with mixed results.
For Microsoft, becoming a strategic ally to retailers has meant big business. In addition to developing retail technologies, it ranks No. 2 behind Amazon in selling cloud services that are key to running e-commerce sites, for instance.
It is not clear how soon Microsoft would bring an automated checkout service to market, if at all, or whether its technology would be the answer retailers are looking for. But some see the technology as the next big innovation in shopping, one that Amazon’s competitors cannot afford to ignore.
“This is the future of checking out for convenience and grocery stores,” said Gene Munster, head of research at Loup Ventures in Minneapolis. The venture capital firm estimates the U.S. market for automated checkout is worth $50 billion. Cashier is one of the most commonly held jobs in the United States.
Microsoft said it “does not comment on rumors or speculation.” Walmart and Amazon declined to comment.
● EXPENSIVE EQUIPMENT
Microsoft’s effort to date has largely fallen under its Business AI, or artificial intelligence, team, one person said. A group consisting of 10 to 15 people has worked on a host of retail store technologies, and they have presented some of their efforts in front of CEO Satya Nadella, the person said.
In a meeting with the team several months ago, Nadella recommended an “intelligent edge” device that could manage connected gadgets such as cameras on site with minimum data transfers to the cloud, which would cut down on costs, said the person.
Making its technology cheap enough so it does not eviscerate grocers’ already thin profit margins is a major challenge for Microsoft, another person said.
Microsoft already showcases the basics for automated checkout at its Retail Experience Center in Redmond. It has half a dozen partners, including Redmond-based AVA Retail, that are building their own checkout-free or related services atop Microsoft’s cloud, some of the people said. Sales of partners’ services result in cloud revenue for Microsoft, along with insight into the market for new retail technologies.
Meanwhile, Microsoft’s internal team, including a computer vision specialist hired from Amazon Go, has worked on attaching cameras to shopping carts to track customers’ items. And it has studied novel ways for smartphones to play a role in the shopping experience, people said. Still, the industry is playing catch-up to Amazon.
The company spent four years building Amazon Go in secret, before launching an employee-only pilot on its Seattle campus in 2016. It collected data for nearly 14 months more before opening the doors to its first Seattle store. Amazon has said it has no plans to introduce checkout-free technology to its Whole Foods Market grocery chain, which it acquired last year.
The company is still hard at work improving the service. Amazon Vice President Dilip Kumar told Reuters in an interview earlier this year that the company is training computers to identify items or activities with as little information as possible. “It’s a really hard problem,” said Scott Jacobson, managing director of Madrona Venture Group, adding it’s “one that Amazon is uniquely positioned to solve.”
• Microsoft is reportedly working on technology that would eliminate cashiers and checkout lines from stores, in an early challenge to Amazon's automated grocery shop, Amazon Go.
• Microsoft has shown sample technology to retailers from around the world and has had talks with Walmart about a potential collaboration, according to sources.
• Amazon Go, which will soon open in Chicago and San Francisco, has sent rivals scrambling to prepare for yet another disruption by the world's biggest online retailer.
• Microsoft said it "does not comment on rumors or speculation." Walmart and Amazon declined to comment.
SAN FRANCISCO (Reuters) - Microsoft is working on technology that would eliminate cashiers and checkout lines from stores, in a nascent challenge to Amazon's automated grocery shop, six people familiar with the matter told Reuters.
The Redmond, Washington-based software giant is developing systems that track what shoppers add to their carts, the people say. Microsoft has shown sample technology to retailers from around the world and has had talks with Walmart about a potential collaboration, three of the people said.
Microsoft's technology aims to help retailers keep pace with Amazon Go, a highly automated store that opened to the public in Seattle in January. Amazon customers scan their smartphones at a turnstile to enter. Cameras and sensors identify what they remove from the shelves. When customers are finished shopping, they simply leave the store and Amazon bills their credit cards on file.
Amazon Go, which will soon open in Chicago and San Francisco, has sent rivals scrambling to prepare for yet another disruption by the world's biggest online retailer. Some have tested programs where customers scan and bag each item as they shop, with mixed results.
For Microsoft, becoming a strategic ally to retailers has meant big business. In addition to developing retail technologies, it ranks No. 2 behind Amazon in selling cloud services that are key to running e-commerce sites, for instance.
It is not clear how soon Microsoft would bring an automated checkout service to market, if at all, or whether its technology would be the answer retailers are looking for. But some see the technology as the next big innovation in shopping, one that Amazon's competitors cannot afford to ignore.
"This is the future of checking out for convenience and grocery stores," said Gene Munster, head of research at Loup Ventures in Minneapolis. The venture capital firm estimates the U.S. market for automated checkout is worth $50 billion. Cashier is one of the most commonly held jobs in the United States.
Microsoft said it "does not comment on rumors or speculation." Walmart and Amazon declined to comment.
● Expensive equipment
Microsoft's effort to date has largely fallen under its Business AI, or artificial intelligence, team, one person said. A group consisting of 10 to 15 people has worked on a host of retail store technologies, and they have presented some of their efforts in front of CEO Satya Nadella, the person said.
In a meeting with the team several months ago, Nadella recommended an "intelligent edge" device that could manage connected gadgets such as cameras on site with minimum data transfers to the cloud, which would cut down on costs, said the person.
Making its technology cheap enough so it does not eviscerate grocers' already thin profit margins is a major challenge for Microsoft, another person said.
Microsoft already showcases the basics for automated checkout at its Retail Experience Center in Redmond.
It has half a dozen partners, including Redmond-based AVA Retail, that are building their own checkout-free or related services atop Microsoft's cloud, some of the people said. Sales of partners' services result in cloud revenue for Microsoft, along with insight into the market for new retail technologies.
Meanwhile, Microsoft's internal team, including a computer vision specialist hired from Amazon Go, has worked on attaching cameras to shopping carts to track customers' items. And it has studied novel ways for smartphones to play a role in the shopping experience, people said.
Still, the industry is playing catch-up to Amazon.
The company spent four years building Amazon Go in secret, before launching an employee-only pilot on its Seattle campus in 2016. It collected data for nearly 14 months more before opening the doors to its first Seattle store. Amazon has said it has no plans to introduce checkout-free technology to its Whole Foods Market grocery chain, which it acquired last year.
The company is still hard at work improving the service. Amazon Vice President Dilip Kumar told Reuters in an interview earlier this year that the company is training computers to identify items or activities with as little information as possible.
"It's a really hard problem," said Scott Jacobson, managing director of Madrona Venture Group, adding it's "one that Amazon is uniquely positioned to solve."
• Microsoft is working on technology that would eliminate cashiers and checkout lines from stores.
• It would be a nascent challenge to Amazon.com's automated grocery shop.
• The Redmond, Washington-based software giant is developing systems that track what shoppers add to their carts.
Microsoft is working on technology that would eliminate cashiers and checkout lines from stores, in a nascent challenge to Amazon.com's automated grocery shop, six people familiar with the matter told Reuters.
The Redmond, Washington-based software giant is developing systems that track what shoppers add to their carts, the people say. Microsoft has shown sample technology to retailers from around the world and has had talks with Walmart about a potential collaboration, three of the people said.
Microsoft's technology aims to help retailers keep pace with Amazon Go, a highly automated store that opened to the public in Seattle in January. Amazon customers scan their smartphones at a turnstile to enter. Cameras and sensors identify what they remove from the shelves. When customers are finished shopping, they simply leave the store and Amazon bills their credit cards on file.
Amazon Go, which will soon open in Chicago and San Francisco, has sent rivals scrambling to prepare for yet another disruption by the world's biggest online retailer. Some have tested programs where customers scan and bag each item as they shop, with mixed results.
For Microsoft, becoming a strategic ally to retailers has meant big business. In addition to developing retail technologies, it ranks No. 2 behind Amazon in selling cloud services that are key to running e-commerce sites, for instance.
It is not clear how soon Microsoft would bring an automated checkout service to market, if at all, or whether its technology would be the answer retailers are looking for. But some see the technology as the next big innovation in shopping, one that Amazon's competitors cannot afford to ignore.
"This is the future of checking out for convenience and grocery stores," said Gene Munster, head of research at Loup Ventures in Minneapolis. The venture capital firm estimates the U.S. market for automated checkout is worth $50 billion. Cashier is one of the most commonly held jobs in the United States.
Microsoft said it "does not comment on rumors or speculation." Walmart and Amazon declined to comment.
● Expensive equipment
Microsoft's effort to date has largely fallen under its Business A.I., or artificial intelligence, team, one person said. A group consisting of 10 to 15 people has worked on a host of retail store technologies, and they have presented some of their efforts in front of CEO Satya Nadella, the person said.
In a meeting with the team several months ago, Nadella recommended an "intelligent edge" device that could manage connected gadgets such as cameras on site with minimum data transfers to the cloud, which would cut down on costs, said the person.
Making its technology cheap enough so it does not eviscerate grocers' already thin profit margins is a major challenge for Microsoft, another person said.
Microsoft already showcases the basics for automated checkout at its Retail Experience Center in Redmond.
It has half a dozen partners, including Redmond-based AVA Retail, that are building their own checkout-free or related services atop Microsoft’s cloud, some of the people said. Sales of partners’ services result in cloud revenue for Microsoft, along with insight into the market for new retail technologies.
Meanwhile, Microsoft's internal team, including a computer vision specialist hired from Amazon Go, has worked on attaching cameras to shopping carts to track customers' items. And it has studied novel ways for smartphones to play a role in the shopping experience, people said.
Still, the industry is playing catch-up to Amazon.
The company spent four years building Amazon Go in secret, before launching an employee-only pilot on its Seattle campus in 2016. It collected data for nearly 14 months more before opening the doors to its first Seattle store. Amazon has said it has no plans to introduce checkout-free technology to its Whole Foods Market grocery chain, which it acquired last year.
The company is still hard at work improving the service. Amazon Vice President Dilip Kumar told Reuters in an interview earlier this year that the company is training computers to identify items or activities with as little information as possible.
"It's a really hard problem," said Scott Jacobson, managing director of Madrona Venture Group, adding it's "one that Amazon is uniquely positioned to solve."
While the walk-out-to-pay system that Amazon Go locations are putting to work has captured imaginations for over a decade now, it’s also fairly clear that such a system won’t work for every business. The good news is that this super-mobile payments system will likely work in at least some places, and we know this because there are some who have put it, or something like it, to work.
One of the biggest problems involved in putting in an Amazon Go system is that the hardware involved represents a massive investment. It’s not that retailers aren’t interested, it’s that they straight-up can’t afford to make the kind of investment a company that can run at a loss for years can afford to. That’s actually led other companies to try something similar, like AVA Retail. It’s building what’s called a “closed-loop invisible payments system” any retailer can put in play.
The AVA Retail system is built around a combination of artificial intelligence and computer vision, a combination which can actually be executed in several different ways. One store could ask shoppers to check in with their mobile devices at tapping points or scanning points, and another could use a different approach depending on the individual store’s needs. AVA Retail’s system requires registration with an app called SmoothShop, but thankfully, that’s just a one-time registration.
This raises interesting questions. How can Amazon respond to this? It’s going to be a tough row to hoe, telling retailers “You need this much more expensive system that does the exact same thing this one that costs half as much does because…um…reasons?” Amazon may be able to push its name recognition—why go with some back-alley system when you can have Amazon—but name recognition can only go so far when the choice is between “unaffordable” and “affordable.” It only gets worse when you consider the AVA Retail system can be custom-tailored to each individual shop.
This isn’t good news for Amazon, but it may be great news for its competitors. Since neither system is in wide use yet, there’s a lot of time for things to change. If Amazon can make its system more affordable, it might well win out. If not, competition is waiting to do what Amazon can’t or won’t.
There could be so much more to a cashier-less checkout experience — and for so much less than what Amazon is spending to do it at its bespoke Amazon Go convenience and grocery stores. That’s not to say Amazon Go is a bad system; it just won’t work for every merchant.
As Amazon Go has demonstrated, walking out the door to pay may be the ultimate in terms of a seamless checkout experience. Customers at the eCommerce giant’s brick-and-mortar mini-mart simply go around the store adding the items they need to their shopping cart, then leave the store — triggering an invisible payment to initiate using their Amazon account.
One of the main problems with Amazon’s technology, however, is that creating the experience requires heavy investments in hardware that not every retailer can afford to make.
That’s why other tech companies are cropping up with the means to build a cashier-less checkout experience for the rest of the world. The CEO of one such company, Atul Hirpara of AVA Retail, told PYMNTS how it’s providing a closed-loop invisible payments system that any retailer can adopt.
● SmoothShop Sailing
Hirpara said there are a few iterations of how the technology could be deployed, depending on the needs of the store. The one thing that remains the same is that a combination of computer vision and artificial intelligence must be combined with the mobile app for the solution to work.
Some stores may ask customers to check in when they arrive by tapping their phone or scanning it at a turnstile. After that, said Hirpara, the phone can go back in the pocket or purse, its job complete. The battery could die and the customer could still complete her shopping trip, including the digital payment at the end, because the computer vision hardware at the store is keeping tabs on her activity and will trigger a payment from her registered account when it detects her leaving the store.
The payment happens invisibly, and a digital itemized receipt is sent to the user’s phone within 15 seconds of leaving the store.
AVA Retail encrypts all payment data, he added, so the actual information persists only on the user’s phone — anything within the company’s system is garbled via tokenization so that, even if a malicious actor got a hold of it, he would be unable to pair it with the correct customer’s identifying credentials.
● One App, Many Stores
Initially, customers must sign up and enter their payment information into the SmoothShop app — but that’s just a one-time friction point, said Hirpara. Once they’ve done so, they can use the app to enter, shop and pay at any store that’s implemented it.
While stores can, to an extent, white-label the app so it suits their brand, Hirpara explained that it’s important to house all stores within one app rather than requiring users to download and register for multiple apps at each store where they shop. Separating stores into bespoke apps would create friction rather than resolving it.
He said that’s even more true for stores that customers may only visit once or twice a year, such as a toy store where a customer buys a Christmas and birthday present for a niece or nephew.
● Philosophy
Hirpara said AVA Retail’s goal is to bring the checkout-free retail experience to a wide range of merchants including convenience stores, toy stores, and quick-service restaurants (QSRs) that have five to 10 locations.
He added that the tech is ready to scale and grow with merchants, but the reason for focusing on small- to medium-sized businesses (SMBs) is to help them keep up with bigger competitors, especially the ultimate competitor: eCommerce.
It’s not easy for SMBs to pay enough cashiers, as the bar keeps rising on minimum wage. Hirpara said that automating checkout can minimize the need for clerks, enabling stores to keep a smaller contingency of employees that are able to focus on helping customers as they need it around the store.
● Differentiation
It’s too early to say whether any checkout-free technology is better than another, but Hirpara said there are a few things that AVA Retail has been deliberate about approaching differently, which he believes can help the platform gain traction on a wider scale.
First, SmoothShop requires less hardware than Amazon Go, making it more affordable (and less of a headache) for SMBs to deploy.
Second, the speed of receipt delivery creates peace of mind almost as soon as the customer leaves the store. Amazon Go can take longer to deliver a receipt, which Hirpara feels can leave the customer anxious about whether he was charged the right amount.
Third and finally, every retailer is different, so each one will need to tailor its checkout-free experience to suit its brands and what it knows about its customer base. Hirpara said that’s why a DIY approach is beneficial. It enables retailers to pick and choose the parts they need and grow the system with them.
For some retailers, waiting in line may not be the biggest point of friction. Or, perhaps what’s needed is more of an in-store enhancement by which customers could tap products with their phone to learn more and share those products with friends.
Any solution that hopes to succeed must fine-tune itself to the nitty gritty of individual businesses, Hirpara said. Retailers must take the time to understand their unique frictions and customer journeys. Only then can they decide which solution is right for them.
